In brief
- Not every breach of contract is fraud. What matters is whether the deception already existed when you paid or signed.
- Gather and preserve the documents before taking any further step with the other party.
- Unlike a simple report, a private criminal complaint (querella) makes you a party from day one: it sets the course of the investigation and allows you to request the attachment of the wrongdoer’s assets from the outset.
- There is no need to go to another jurisdiction to get your money back. Restitution, compensation and asset freezing can all be sought within the criminal proceedings themselves.
- Aggravating circumstances (housing, amounts over €50,000, abuse of business credibility) raise the penalty to up to six years’ imprisonment, and up to eight in the most serious cases.
Commercial and real estate transactions usually involve large sums, complex contracts and a relationship of trust between the parties. When the other party disappears, fails to deliver what was promised, or turns out to have used false information to obtain a payment, the first reaction is usually to demand the money back. However, before sending further demands or starting negotiations, it is advisable to analyse whether the facts may amount to fraud and to act to preserve the evidence.
Not every breach of contract is fraud
The mere fact that a deal goes wrong does not necessarily mean that a crime has been committed. There may be a civil breach, a supervening insolvency or a dispute over the scope of the contract. Fraud requires something more: sufficient deception that causes a mistake and leads the victim to hand over money or carry out another detrimental act of disposal, with the perpetrator acting for profit (Article 248 of the Criminal Code). In addition, the Supreme Court requires that deception to exist before or at the time of the contract: from that moment the perpetrator already contemplates not performing, and the contract serves as a mere “contractual screen” (Supreme Court Judgment 327/2025 of 9 April).
The key question is what the other party knew and what it concealed when it received the money or got the company to sign. A project that fails because of a later event is not the same as contracting from the outset with no real capacity or intention to perform, while feigning solvency, ownership, licences, financing or the availability of a property that did not exist.
In a real estate transaction, relevant examples include selling someone else’s property as one’s own, concealing charges or encumbrances, or selling a property that had already been sold before the final transfer. These cases are a specific offence, punishable by one to four years’ imprisonment (Article 251 of the Criminal Code). Other examples are offering a development with no real financial basis, or presenting guarantees, permits or sureties that do not exist. Deception also exists where essential information that the other party needed in order to decide whether to pay is withheld: had the victim known it, they would not have contracted (Supreme Court Judgment 327/2025 of 9 April).
Gather the documents before taking any further steps
The evidence is often scattered. It is advisable to keep the contract and its annexes, commercial offers, brochures, emails, messages, lawful recordings, invoices, transfer receipts, promissory notes, deeds, land registry extracts, technical reports, conversations with intermediaries and any document showing what was offered and what was known at each stage.
It is important to draw up a timeline: first contact, information received, signing, payments, requests for performance, replies, and the moment the possible deception was discovered. You should also identify who was really involved: the contracting company, its director, the estate agent, intermediaries, guarantors and the ultimate recipient of the payments.
Do not alter files, delete conversations or provide only the documents that support one version. An accounting or forensic IT review can help trace the money, quantify the loss and locate any subsequent transfers.
Criminal complaint or police report: why a querella is usually the better option
With a querella (a private criminal complaint filed by the victim), the company does more than report what happened. It becomes a prosecuting party from its very first filing. A querella must be filed through a lawyer and a court representative (procurador), and from the outset it requests specific investigative measures and the attachment of the defendant’s assets (Article 277 of the Criminal Procedure Act). This achieves two things that a simple report does not guarantee:
- Setting the course of the investigation. The complaint sets out the facts in an orderly way, identifies those responsible and proposes to the investigating court the measures required: requests to banks, notaries and registries, corporate records, witnesses, forensic accounting. The court starts from that roadmap.
- Securing the money from day one. The same filing requests the bond, attachment or interim measures needed to prevent the wrongdoer from emptying their accounts or selling their assets while the case proceeds.
A police report (denuncia), by contrast, merely brings the facts to the attention of the police, the Guardia Civil, the court or the Public Prosecutor. Whoever files it is not a party, and the investigation remains in the hands of others, with their own timing and priorities. The victim may later appear as a private prosecutor before the stage at which charges are formally drawn up (Article 110 of the Criminal Procedure Act). In the meantime, however, time is lost, and in an economic fraud that time is often decisive in tracing the money.
A report may make sense when immediate action is needed and the documentation is not yet available. But where there are several parties involved, shell companies, international transactions or a risk of assets being hidden, the right course is to prepare a querella with a well-ordered account of the facts, a specific proposal of investigative measures and a request for interim measures. Victims are entitled to information on how to report a crime, provide evidence, obtain legal advice and claim compensation (Article 5 of Act 4/2015 on the Statute of Victims of Crime).
Recovering the money within the criminal proceedings
Criminal proceedings do not only seek a conviction. The civil claim is also brought within them, unless the victim expressly waives or reserves it (Article 112 of the Criminal Procedure Act). The judgment may order restitution of the asset, reparation of the damage and compensation for losses (Article 110 of the Criminal Code). Restitution applies even if the asset is already in the hands of a third party, unless that party acquired it in a way that makes it legally irrecoverable (Article 111 of the Criminal Code). Anyone who has benefited from the money without taking part in the offence must return what they gained (Article 122 of the Criminal Code).
A conviction does not, in itself, guarantee that the money will be recovered. That is why measures can be requested from the start of the investigation. Where there is evidence against a person, the court requires them to post a bond to secure their financial liabilities and, if they fail to do so, attaches sufficient assets (Article 589 of the Criminal Procedure Act). The interim measures of the Civil Procedure Act may also be adopted, such as preventive attachment, a precautionary entry in the Land Registry or an order to refrain from certain conduct (Article 764 of the Criminal Procedure Act, in conjunction with Article 727 of the Civil Procedure Act).
The application must be based on specific data: the amount of the loss, known assets, suspicious movements, related companies and the risk of insolvency or disappearance. A generic request for attachment is not enough. It is also important to check whether the money can be traced, whether there are recoverable assets, and whether restitution of the property or the annulment of the transaction obtained by fraud should be sought.
Real estate transactions: housing, amount and business credibility
Basic fraud is punishable by six months to three years’ imprisonment (Article 248 of the Criminal Code). The penalty rises to one to six years’ imprisonment and a fine where the fraud concerns housing or other assets of recognised social utility, where the amount defrauded exceeds €50,000 or affects a large number of people, where it is particularly serious given the situation in which it leaves the victim, or where the perpetrator exploits their business or professional credibility (Article 250(1) of the Criminal Code). If the amount defrauded exceeds €250,000, or if the housing aggravating factor is combined with seriousness, amount or abuse of trust, the penalty is four to eight years’ imprisonment (Article 250(2) of the Criminal Code).
Not every property purchase automatically triggers the housing aggravating factor: the property’s use and the proven facts will have to be examined.
A quick but orderly reaction
Early mistakes can make recovery harder: negotiating without leaving a record, publicly accusing someone without evidence, alerting the possible wrongdoer before the documents have been secured, or filing a vague report that does not explain how the money moved. The most effective approach usually starts with a review of the facts, preservation of the evidence, identification of those responsible and an immediate assessment of protective measures. On that basis, the querella can be filed on solid grounds, with interim measures requested from the very first filing.
Frequently asked questions
When is a breach of contract fraud?
When the deception already existed at the time of contracting: the perpetrator knew they would not, or could not, perform, and used the contract as a front to obtain payment. If the intention not to perform arises later, it is in principle a civil breach (Supreme Court Judgment 327/2025 of 9 April).
Is it better to file a querella or a police report?
In a business fraud, usually a querella. It makes the company a prosecuting party from the outset, allows it to propose investigative measures and, in the same filing, to request the attachment of the wrongdoer’s assets (Article 277 of the Criminal Procedure Act). Whoever merely files a report is not a party and must appear later (Article 110 of the Criminal Procedure Act). In the meantime, valuable time to secure the money is lost.
Can I recover the money without bringing a separate civil action?
Yes. The civil claim is brought within the criminal proceedings themselves, unless waived or reserved (Article 112 of the Criminal Procedure Act). The judgment may order restitution and compensation, and a bond and attachment of assets can be requested during the investigation (Articles 589 and 764 of the Criminal Procedure Act).
What is the penalty for real estate fraud?
It depends on the circumstances. It ranges from six months to three years for basic fraud, one to six years if it concerns housing or exceeds €50,000, and four to eight years if it exceeds €250,000 or aggravating factors are combined (Articles 248 and 250 of the Criminal Code). Selling someone else’s property, or a property with concealed charges, carries one to four years (Article 251 of the Criminal Code).
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